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SEC June 28 inquiry into Apple-Nokia deal

SEC June 28 inquiry into Apple-Nokia deal

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Published by Jonathan Fingas

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categoriesTypes, Legal forms
Published by: Jonathan Fingas on Oct 03, 2011
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10/03/2011

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 June 28, 2011Via E-mailMr. Peter OppenheimerSenior Vice President and Chief Financial OfficerApple, Inc.1 Infinite LoopCupertino, California 95014
Re: Apple, Inc.Form 10-Q for the Quarter Ended March 26, 2011Filed April 21, 2011File No. 000-10030
Dear Mr. Oppenheimer:We have reviewed your filing and have the following comments. We have limited ourreview of your filing to those issues we have addressed in the comments below. In some of ourcomments, we may ask you to provide us with information so we may better understand yourdisclosure.Please respond to this letter within ten business days by amending your filing, byproviding the requested information, or by advising us when you will provide the requestedresponse. If you do not believe our comments apply to your facts and circumstances or do notbelieve an amendment is appropriate, please tell us why in your response.After reviewing any amendment to your filing and the information you provide inresponse to these comments, we may have additional comments.Form 10-Q for the Quarter Ended March 26, 2011Note 6. Commitments and ContingenciesContingencies, page 181.
 
We note various news articles discussing the patent litigation settlement between Nokiaand Apple. Supplementally tell us the amount and terms of such settlement agreement,any amounts accrued, the periods in which they were recognized, and the timeline of thenegotiations with Nokia that led to the June settlement agreement. Also, tell us how youconsidered including a discussion regarding this matter in your MD&A disclosures andfinancial statement footnotes, including disclosure of a reasonably possible range of lossin excess of amounts accrued. Further, tell us how considered disclosing this event in aForm 8-K or tell us how you determined that such disclosure was not necessary.
 
 Mr. Peter OppenheimerApple, Inc.June 28, 2011Page 22.
 
With regard to the disclosures provided in your Forms 10-Q and Form 10-K, pleaseexplain further the following:
 
If there is at least a reasonable possibility that a loss exceeding amounts alreadyrecognized may have been incurred you must either disclose the estimated additionalloss, or state that such an estimate cannot be made. Please tell us, whether youbelieve that it is reasonably possible that additional losses would be material and, if so, how your disclosures comply with paragraphs 3 through 5 of ASC 450-20-50 andQuestion 2 of SAB Topic 5Y. To the extent that you have determined that it isreasonably possible you will incur a loss in excess of the amounts already accrued,but such amounts are not material, revise your disclosure to clearly indicate as such.
 
Tell us what you mean by the statement that the company does not have a potentialliability related to any current legal proceedings and claims. In this regard, explainfurther what you mean by “potential liability” and tell us how you determined thatyour reference to “potential liability” complies with the terminology in ASC 450-20-50 (e.g. probable, reasonably possible or remote loss contingency).
 
Considering management’s assertions that the company does not have any potentialliabilities that would have a material adverse affect on your financial condition orresults of operations, please explain further your disclosures where you indicate “[i]f the Company failed to prevail in any of these legal matters or if several of these legalmatters were resolved against the Company in the same reporting period, theoperating results of a particular reporting period could be materially adverselyaffected.” Tell us your consideration to clarify these disclosures using terminologywithin the guidance of ASC 450. For instance, revise to clarify whether youdetermined that the likelihood of not prevailing in any of these matters in the samereporting period is remote, reasonably possible or probable. Also, tell us if youomitted the statement of changes in stockholders’ equity and statement of cash flowsfrom your disclosures for a particular reason.We urge all persons who are responsible for the accuracy and adequacy of the disclosurein the filing to be certain that the filing includes the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. Since the company and its management arein possession of all facts relating to a company’s disclosure, they are responsible for the accuracyand adequacy of the disclosures they have made.In responding to our comments, please provide a written statement from the companyacknowledging that:
 
the company is responsible for the adequacy and accuracy of the disclosure in the filing;

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